This is an obligation of RBC that pays considerably more than their straight debt.
Oh dear.
From Risk:
RBC is offering an income product that relies on the stock performance of 3D printer manufacturer 3D Systems for the return of capital, but has no such restriction on the quarterly income payment. The annualised coupon is 13.75%HT vbounded
Royal Bank of Canada has issued reverse convertible notes linked to the common stock of 3D Systems Corporation. This type of product is known as 'income generating' and generally pays a fixed income while placing principal at risk, the repayment of which is linked to the performance of the underlying stock. This product pays a monthly income with an annualised rate of 13.75%. The coupons are paid regardless of the performance of the underlying asset.
Principal is at risk if the closing day barrier of 70% is breached during the monitoring period, in which case principal is lost at the rate of 1:1 for any fall in the underlying below its initial level. In the worst-case scenario where the underlying finishes at zero, the investment will return no principal.
The barrier is observed at the close of business of each day and, if breached, principal is at risk if the underlying fails to recover to at least its initial level by maturity. For example, if the underlying breaches the barrier and finishes at 65% of its initial level, investors would be returned 65% of their principal investment, a loss of 35%....MORE
Here's the 2-year chart of the stock, currently trading at 185 times ttm earnings:
